California Lawmakers Offer Oakland a Bailout, But District May Pass

California lawmakers have approved special legislation offering a
$10-million bailout loan for the Oakland public schools.

Officials of the troubled school system said last week, however,
that they were not interested in the offer and had made other
arrangements for financing their projected deficit.

The bill was the most significant of a number of education-related
measures approved by the legislature before it adjourned its 1989
session Sept. 15.

The Oakland measure allows state Superintendent of Public
Instruction Bill Honig to appoint a "monitor/trustee" with limited
powers to review the district's actions.

If the Oakland board decides to ac4cept the state loan, the trustee
would gain greater oversight powers. That would create a situation
similar to financial bailouts that other California districts have
accepted in the past.

Even if the board rejects the loan, however, Mr. Honig could appoint
a full-fledged trustee if he judged that the district had "displayed
bad faith" in its recovery efforts, state officials said. The new bill
makes Oakland the only school district in the state to be subject to
that potential sanction.

The original version of the bill, sponsored by Assemblyman Elihu
Harris of Oakland, would have forced the district to accept both the
loan and the trustee. Amendments produced the final version, which
passed in both the Assembly and the Senate by overwhelming margins.

Corruption Charges

The Oakland district has been plagued by charges of corruption and
thievery and faces a budget deficit of up to $20 million.

In the last six months, police have charged eight school employees
with crimes ranging from grand theft to forgery. The school board has
been subpoenaed by an Alameda County grand jury, while an investigation
by The Oakland Tribune has produced allegations of a system of
patronage run by top school officials. (See Education Week, Sept. 13,
1989.)

A group of parents began circulating petitions this month seeking
recalls of all seven board members.

"You've got a disintegrating school district, and the kids are
suffering," Mr. Honig told local reporters. "Somebody's got to prick
the boil."

The district, meanwhile, has gone ahead with a plan to finance its
deficit through the sale of "certificates of participation," using
school property as collateral.

Certificates worth $13.5 million were sold this month, and the
district has submitted what it contends is a balanced budget to the
Alameda County superintendent for approval.

The county superintendent is responsible under state law for
approving the Oakland budget.

Both William Berck, the county superintendent, and Mr. Honig have
said they will not approve a budget balanced with certificates of
participation, which they say are intended only for capital
construction and other one-time expenditures.

Sherri Willis, a spokesman for the Oakland schools, said last week
that the district's financing plan "is just a better deal." She noted
that the interest rate on the certificates is two points lower than the
rate on the bailout loan.

"Now we just have to wait and see whether or not our budget will be
accepted by the county superintendent," she said.

Textbook Adoption

In other action, the California legislators approved two separate,
nearly identical versions of a bill to provide textbook publishers more
flexibility in submitting materials for adoption by the state board of
education.

The measure had provoked a nationally watched battle that pitted Mr.
Honig and other prominent educators against publishers and a leading
textbook critic. But the two sides agreed on a compromise, embodied in
the bills, that would allow publishers to submit materials more
frequently, while retaining the board's authority to review them. (See
Education Week, May 21, 1989.)

Despite the agreement, however, the state board voted to oppose the
measures. Among other objections, the board contended that a provision
requiring it to state its reasons for rejecting textbooks might "invite
litigation by publishers of rejected materials."

Other Bills

Other measures approved by the lawmakers would:

Transfer supervision of private vocational schools and other
postsecondary training institutions from the state education
department to a new agency.

The bill would create a 20-member Council for Private and Vocational
Education to license and regulate private postsecondary schools,
especially those that are not accredited by professional
associations.

Give Hispanics and other minorities more political clout in local
school-board elections by requiring nine school districts with large
minority populations to hold elections within specific electoral
districts, rather than at-large.

Require all middle- and high-school students to receive
aids-prevention instruction unless their parents specifically
objected to it.

Require districts to inform teachers about students who had
caused physical injury to anyone within the last three years, and
increase the penalty for crimes committed against school
employees.

As of last week, Gov. George Deukmejian had not acted on any of the
bills.

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